Saturday, June 03, 2000
Savvy Strategies
Giving to charity benefits family
By Amy Higgins
The Cincinnati Enquirer
Problem: You are near retirement and have a portion of your wealth in a retirement plan. You want your estate to fund some favorite charities in addition to it going to your family.
Strategy: Consider leaving your retirement plan assets to charity.
Shari Fox, vice president development and community relations for Beech Acres family service agency and president of the Greater Cincinnati Planned Giving Council, says this might maximize the value left to both the family and the cause.
Here's why:
• Retirement plans are unique in that the IRS allows us to defer paying income tax on these accounts. The money will eventually be taxed as it is distributed, either to you or your heirs.
• Once retirement plan assets pass from you or your spouse to a nonspousal beneficiary — such as your children — estate and income taxes can become quite severe.
These tax implications make it critical to do some careful planning with your professional legal and tax advisers. Because of these special tax and estate planning considerations, retirement plan assets are an outstanding choice for making charitable gifts. Naming one or more charities as beneficiary of your retirement plan often ensures that a greater percentage of your total estate goes to your heirs. By naming a tax-exempt charity as beneficiary, you remove the assets that pass to them from your taxable estate. Also, the amount that passes to a qualified charity avoids income taxes, maximizing your money's impact.
Be sure to work with a knowledgeable attorney and tax adviser to determine whether this strategy will work for you. If you truly want to leave a legacy that includes the greater good, this may help match your personal objectives with your philanthropic ones.
Readers: Consider Savvy Strategies as general information only and seek the help of professionals because circumstances might vary. Planners: Send your Savvy Strategies to Amy Higgins, 312 Elm St., Cincinnati, 45202 or e-mail ahiggins@enquirer.com.
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